36
Developing an Israeli Grand Strategy toward
a Peaceful Two-State Solution
concluded upgraded arrangements for the transfer of goods
between Israel and the Palestinian territories and related tax
procedures. While implementation since has been partial at
best, the current ministers of finance (Kachlon and Bishara)
have established good working relations and direct lines
of communication which could allow for this issue of to be
re-examined. In this context it will be essential to include
particularly the Palestinian private sector in negotiations,
in order to test ahead of time, their capacities to invest and
promote economic growth.
The need to (re)introduce Palestinian customs officials to
hands-on experience in customs procedures and best
practices is necessary to secure the level of professional
capacity required to implement an independent tax regime in
future. The case of the Turkish-led project, the Jenin Industrial
Free Zone (JIFZ) can potentially provide an opportunity to
test independent Palestinian customs authority. Located
in area B, which prohibits access and control by Israel’s
customs authority, the JIFZ is in close proximity to the Israeli
customs point at Jalameh/Gilboa crossing. The involvement
of Turkish investors, in the currently improving diplomatic
climate between Israel and Turkey, coupled with the fact that
the Palestinians signed a concession agreement with the
Turkish developer stating that the industrial zone will operate
as “tax free” area which necessitates close coordination with
Israel, provides an opportunity to “think outside the box” for
trade and investment enabling solutions.
27
Ultimately, the
JIFZ project, similarly to other major economic projects that
need to be promoted further in Palestinian Territories, is in
the interest of Israel too. It provides a “win-win” opportunity
since it offers local Palestinians much-needed employment,
economic development, trade and investment opportunities
and in turn, offers Israel stability and improved regional
cooperation.
Another basic institutional aspect required to enable any
economic activity is that of law and order. Indeed, if the PA
cannot maintain adequate policing service in areas under its
administration, and it fails to maintain a “business-friendly”
environment, than it will not be able to attract business
and investors. In area B, the Palestinian ability to exert its
authority is limited. Under the Oslo II accords, responsibility
for public order in area B was given to the Palestinian Civil
Police. However as the overall security authority remained
since in the hands of Israeli security forces, the constant
need for Israeli- Palestinian security coordination on each and
every law enforcement activity resulted de facto in a limited
enforcement capacity and lack of regular police services
in area B. This state of affairs does not allow the fulfillment
of Palestinian central and local governance functions on a
regular basis in areas under Palestinian jurisdiction, and the
resulting law enforcement vacuum in area B has created a
safe haven for criminal activities and local possession of
weapons that challenge the authority of the PA and its ability
to control these areas.
27 Discussion with Israeli customs, April 2016.
Both the international community and the Israeli security
establishment are well aware of the risks of growing law
enforcement vacuum in parts of area B, lack of development
of area C and the need for positive stabilizing measures on
the ground that will answer the growing frustration of the
population and of the PA. Israeli security authorities have
recently promoted positive steps: even after the current
outbreak of violence Israeli authorities continue to recommend
differentiating between Israeli response to terrorists on one
hand and to the Palestinian population on the other hand,
and avoiding collective punishment. However, in order
to create significant changes on the ground, additional
significant steps must be undertaken to strengthen security
cooperation and allow for Palestinian police to upgrade its
law and order capacity.
The OQ in collaboration with USSC (US Security Coordinator)
and EUPOL COPPS (EU Coordinating Office for Palestinian
Police Support), worked with Palestinian and Israeli security
authorities and developed a comprehensive mapping of PA
police access in the West Bank. As a result, in April 2015,
Israel dramatically eased the coordination rules for the
Palestinian security forces (PASF). OQ is currently working
with the PA and the donor community on the establishment
of new police stations based on the expanded access (OQ,
2016).
A final note on the institutional level relates to the need for
Palestinian trade diversification. A persistent trade imbalance
exists between Israel and Palestinian Authority: Palestinian
purchases from Israel account for about two-thirds of total
Palestinian imports, and Palestinian sales to Israel account
for about 81 percent of total Palestinian exports. In contrast,
trade with the Palestinian Authority is equivalent to only a small
percentage of Israeli foreign trade (Bank of Israel, 2012
28
). In
terms of numbers, these figures amount to NIS 16.4 billion in
Israeli sales to the PA and NIS 3 billion in Israeli purchases
from the PA.
29
This suggests that in order to reduce its trade
dependence on Israel, the relevant Palestinian institutions
need to diversify trading partners. Although the PA has signed
agreements with GAFTA (the Greater Arab Free Trade Area),
much of that potential remains to be realized. For example,
promoting Palestinian control of imports from GAFTA on
customs rate and standardization processes could offer a
potentially immediate positive impact on PA’s foreign trade
(Peres Center 2015). A different example could take the
form of a Palestinian-Jordanian-Israeli tripartite agreement
to allow the movement of Jordanian goods to Palestinian
markets and would be in the interest of Israel, since the
more integration PA has eastwards the more integration
Israel could have with that third country.
30
28
Documents/Israel-Palestinian%20trade.pdf
29 From a “business guide to Israeli and Palestinian businesses”,
published by the Israeli Union of Chambers of Commerce, 2015.
30 Interview with senior Israeli economist, June 2016.
